Looking at the services PMI for the individual euro zone states released on Tuesday, Italian services saw a reading of 49.8, which remains in a contractionary phase but is higher than both the previous month's reading of 48.8 and the expected figure of 48.2.

"April figures painted a slightly more positive picture of the Italian services economy, although activity and new orders continued to fall, reflecting a continued difficult economic environment," said Verity Howell, economist at NTC Economics.

"Sharply rising input costs were still evident, but inflation eased from the survey-record high seen one month ago," she added.

Spain also saw a rise in its services PMI, rising to 42.5 in April from 40.9. However, like Italy, Spanish services PMI is still contracting.

"The Spanish service economy began Q2 as it ended Q1, with activity and new business falling at sharp rates as firms reported that weakness in the construction sector and the on-going credit crisis were affecting demand," an NTC Economics press released noted.

"Official data pointed to a notable rise in the unemployment rate to 9.6% in Q1, from 8.6% in the previous quarter, and judging by PMI data from the manufacturing and services surveys in April a further increase can be expected in Q2."

The French services PMI, covering companies from IT to the transport sector, fell to 52.8 from March's reading of 57.3, down from the April preliminary estimate and the expected reading of 54.0. The final April reading is the lowest since August 2003.

NTC economist Jack Kennedy suggested that April's data confirmed the French economic slowdown after a robust showing at the beginning of 2008.

"It was the turn of the service sector to suffer a marked downshift in growth in the latest month, following a similar development in manufacturing during March," Kennedy said.

"Driving the moderation of output growth was a markedly weaker rise in new business, as a slowing global economy and declining consumer purchasing

power continued to weigh on demand."

German services PMI came in at 54.9, up from the expected and preliminary estimate of 54.6 as well as March's figure of 51.8.

"The resilience of the German service economy was in marked contrast to the relative weakness recorded by PMI figures for the other major euro area countries in April," noted NTC economist Tim Moore.

"Input cost inflation accelerated to its second-highest level since October 2000, driven by rising wages and oil-related prices. A further solid increase in service providers' charges suggested that a proportion of these higher costs were passed on to clients," he added.

The euro zone PMI composite was also announced on Tuesday and came in at 51.9; in line with expectations, unchanged from April's preliminary estimate and up from March's record low 51.8.

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